Employers still scrambling to prepare for 2014 health care changes

Wednesday, June 12, 2013 11:40 AM

Many employers have upped their estimates of what it will cost them to comply with the new federal health care law next year, and many others still don't have a good handle on how the changes will affect their bottom line, according to a new report released today by Mercer LLC, a global human resources consultant.

The national survey of nearly 900 employers highlights the evolution of businesses' thinking on the sweeping health insurance changes in the three years since the Patient Protection and Affordable Care Act was signed into law.

In 2011, 25 percent of survey respondents expected the law would have little or no impact on cost (adding less than 1 percent to insurance costs). In 2013, only 9 percent of respondents expect to get off so easily. Additionally, 19 percent of respondents now expect health insurance costs to rise significantly (by 5 percent or more), compared with just 15 percent in 2011.

Equally concerning is that 32 percent of employers responding said they know little about the cost of the changes.

Although employers can calculate how many employees will be newly eligible for coverage, they can only guess how many will actually choose coverage. All individuals are required to have health coverage in 2014, but because the tax penalty for not obtaining insurance will be relatively low in 2014 - just $95 per individual or 1 percent of household income, whichever is greater - some employees may still choose to go without coverage.

Just 17 percent of employers surveyed said they were budgeting for an increase in enrollment in 2014, 42 percent said they were not and 41 percent still haven't decided.

Looking ahead, more than one-third of respondents said they have begun taking steps to avoid the "Cadillac tax," a 40 percent excise tax on high-cost health plans that becomes effective in 2018. To avoid the tax, employers must keep total health plan cost below a threshold of $10,200 for an individual and $27,500 for a family in 2018.

Mercer is hosting a live webcast today at noon to help employers understand the issue better.Click herefor more information and to register.